Eight reasons why everybody needs to be able to see company ownership information (not just the police)

Information on who ultimately owns and controls British companies goes live for the first time today. Hurray! If you’re reading this blog, you’re probably all too aware that this is something that Global Witness has spent years campaigning for this. The UK was the first country to commit to making such information transparent in 2013, and since then eight other countries have either got or promised to have such registers, and a further seven (plus the EU) are considering having them. That’s brilliant news.

It’s also a good opportunity to step back and remind ourselves why beneficial ownership information needs to be fully public, and to be made available in in an open data format. As our good friend Chris Taggart from Open Corporates said about the release of the new data:

Making beneficial ownership public and open data isn’t just essential to prevent use of companies for corruption, fraud and money laundering – it’s also essential for good business, allowing companies to know who they’re really doing business with, and so reducing risk and increasing competition.
- Chris Taggart, Open Corporates

2. To help businesses and
consumers protect themselves from being victimised by crime. Is the health insurance you are buying actually going
to pay out when you need it, or is it being run by people who are spending all
the premiums on themselves? Is the
company you are going to invest in actually the company you think it is, or
another company set up by fraudsters with the same name? Is that business you are looking to invest in
actually a Ponzi scheme? Public
beneficial ownership information is needed to help prevent and detect crimes
like these (which are all based on real-life cases such as this, this and this).

3. To help level the playing
field. If you own a small business or plot of land,
you can be ripped off if you think you are negotiating with a small, unknown
company, but are in fact doing business with a wily multinational hiding behind
an anonymous company. Public registries
will help small companies negotiate on a more competitive basis. The free market works best when all parties
have full access to information.

4.
To help
protect civil and environmental rights. The restaurant you have been working at closes
down owing you months in back-salary that the owner never paid you. To take the owner to the small claims court
to get your money back, you need to know who it is who owned the restaurant. The same argument applies to companies that,
for example, pollute the environment, manufacture defective products, harm their workers,
and steal pensions.

5. To help civil society detect
crime. If
you live in a country where you can’t trust the police to carry out decent investigations, especially into
people who are rich and powerful, then you are in particular need of company
ownership information being available to journalists, NGOs and concerned
citizens in order to help find out what is going on, and keep the system honest.

6.
To help law enforcement detect crime and apprehend criminals. If the automatic exchange
pilot doesn’t give automatic access to all beneficial ownership information,
then law enforcement too will benefit from making beneficial ownership
information public. The problem at the
moment is that police struggle to come up with the evidence they need to
justify why another country should tell them who owns a company. It’s a catch-22. In addition, if police and tax inspectors have to
request company ownership information from someone, there is a risk that the
company owners are tipped off about the investigation, allowing them to move
their money elsewhere.

7. To help save money. Three separate analyses (this, this and a 2002 UK government
impact assessment ‘Disclosure of beneficial ownership of unlisted companies’)
all show that the likely economic benefits of collecting beneficial ownership
information and then making it public outweigh the costs.

8.
To help prevent insecurity. Money laundering fuels political instability around the world and
supports terrorists and extremism.
Making beneficial ownership information public will reduce the places
around the world in which terrorists can hide their money.

The UK data that’s been released today isn’t just being made public, but is also being published in an open data format. In other words, the data is free for anyone to download and use and can be read by a computer. This is massively important as the advantages listed above of making beneficial ownership information public are critically dependent on making the information as easy to analyse as possible.

Congratulations to the UK on its new register and let’s keep up the work to ensure that the other countries also adopt fully public and open data registers.